TFM Sunrise Update 4-9-21

CORN

Corn futures narrowly mixed overnight ahead of today’s USDA Monthly Supply/Demand report  scheduled for release at 11 AM Central.  May corn is hovering around 5.80, within a nickel of last week’s Post March 31 report contract high of 5.85.  Dec corn rose 4 cents overnight to a new high of 4.98-3/4. on follow-through from yesterday’s unexpected pre-report rally as the trade views Dec corn too low to justify supply and demand.  Beyond this year, U.S. 2021 corn acres multiplied by a record yield minus normal demand could suggest a U.S. 2021/22 carryout near 850 mil bu.  USDA could raise U.S. 2020/21 corn demand and drop carryout below the average trade guess of 1.379 bil bu.  Most private analysts are using a carryout closer to 1.20. U.S. domestic cash corn basis is higher which is also helping support nearby futures.   USDA could also lower Brazil corn crop and raise China corn imports.  A few weather watchers are also increasing odds that U.S. summer weather could be drier and warmer than normal.

SOYBEANS

The soy complex was mixed overnight.  May beans are down 4 cents this morning to 14.11-1/4, mid-range of last night’s trading range between 14.19 and 14.07-1/4.  Nov is down 1-1/2 cents to 12.71-3/4.  World vegoil prices are higher, but concern over China’s pig herd due to ASF and lower South America soymeal prices continues to weigh on soymeal values.  Chinese Ag futures (May) settled down 48 yuan in soybeans, up 6 in Corn, up 17 in Soymeal, down 106 in Soyoil, and down 134 in Palm Oil.  Malaysian palm oil prices were up 73 ringgit at 3,864 (basis June) at midsession supported by prospects of good demand, tight supplies.  Today’s USDA numbers are expected to be supportive, and many private analysts views U.S. 2020/21 soybean carryout below 100 mil bu and some are using U.S. 2021/22 soybean carryout below zero.  If realized, Nov bean prices are too low at this time.

WHEAT

Wheat futures traded higher overnight as the complex carves out a bottom on daily charts on concern over drier than normal 2021 U.S. HRS and Canada weather.  Long range maps hint of some showers late next week but then dryness returning.  It is also dry in western European Uniont, U.S. South Plains and Ukraine.  May CBOT wheat was up 4 cents to 6.32-3/4 and is up 21 cents for the week while trading back to the contract’s 100-day moving average resistance.  May KC was up a nickel to 5.81-1/2 and is up 16 cents on the week.  May MPLS Spring wheat is up 3 to 6.43-1/4 while gaining a solid 44 cents for the week.  USDA is not expected to make big changes in its U.S./World wheat supply and demand that features adequate global wheat supplies.

CATTLE

Cattle are called steady to higher.  Futures finished mixed to mostly higher on Thursday featuring continued strength in  the back months as October and later contracts finished higher and established new contract highs again.  The pressure in the front month likely stemmed from fund index rolling from short April positions into June or August.  This typical occurs when the front month contract moves past first notice day, which happened on April 5.  Cash trade has continued to develop, as Southern live deals ranged from $118 to $122/cwt, mostly $120 to $121, $3 to $4 higher than the bulk of last week’s trade.  The majority of trade in the North was on a live basis, at $120 to $125, mostly $122 to $123, $3 to $4 higher than the bulk of last week’s live deals.  Carcass values stayed strong into the close as Choice gained 4.19 to 270.50, and Select added a strong 8.64 to 263.83.  Movement was light to moderate at 110 loads.  The feeder market traded softer, as a strong day in grain markets kept pressure over prices despite the longer-term strength in live cattle.  Feeders may also exhibit caution going into today’s USDA grain supply/demand report as a strong move higher in the corn market will likely add selling pressure.  The fundamentals and the technical picture stay supportive overall as the cattle market is looking for a top.

HOGS

Hogs are called steady to higher amid a strong fundamental and technical foundation.  The cash market maintains its strength, and the Lean Hog Index gained another .13 to 110.47.  The index is reflecting the still very strong countryside cash market as strong highlighted by retail demand favoring the packers’ ability to bid up for cash hogs.  Pork carcasses traded .31 higher to 111.00 on 279 loads. They are looking to make another move higher in value after plateauing at $108-109 the past week.  Weekly exports stayed supportive with new sales of 33,400 MT and weekly shipments of 38,400 MT.  Mexico was a strong buyer of U.S. pork at 23,000 MT.  Philippines announced reductions of pork tariffs from 30% to 5% on pork imports as the country struggles with its own cases of ASF.  This policy will be in place for the next three months, then move to 10% for the minimum access volume of pork imports.  All in all, the hog market is still looking for a top despite being over-bought, as the fundamental and technical picture encourages more money flow and buying support.

 

Author

Matthew Strelow

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